[nikki1229]

O'Henry's Data Services Unadjusted Trial Balance November 30, 20XX
Cash $9,700
Accounts receivable 7,900
Prepaid expenses 2,600
Furniture, fixtures, & equipment 151,300
Accumulated depreciation $15,600
Accounts payable 3,800
Salary payable
Unearned service revenue 6,700
Benjamin O'Henry, capital 137,400
Benjamin O'Henry, withdrawals 2,000
Service revenue 14,300
Rent expense
Salary expense 3,400
Utilities expense 900
Depreciation expense
Supplies expense
Total $177,800 $177,800
Revenues and expenses vary little from month to month, and November is a typical month. Your investigation reveals that the unadjusted trial balance does not include the effects of monthly revenues of $2,100 and monthly expenses totaling $2,750. If you were to buy O'Henry's Data Services, you would hire a manager who would require a monthly salary of $3,000.The most you would pay for the business is 20 times the monthly net income you could expect to earn from it. Compute this possible price. The least O'Henry will take for the business is his ending capital. Compute this amount. Under these conditions, how much should you offer O'Henry? Give your reason.


1. First I adjust the trial balance for the under-reported expenses ($2,750) and revenues ($2,100).

This means that revenues for November was 14,300+2100 = 16,400

Expenses was the reported amounts of 3,400 and 900, plus the under-reported amount of 2,750 for a total of $7,050.

This means that pre-tax income was about 16,400-7050 = 9,350. Multiply this by 12 and you have $112,200 per year.

I would pay 20x November's income of 9350 = 187,000.


What about the $3000/monthly salary? Is this the correct way to get the net worth and ending capital? Please ADVICE I Don't THINKS GOATS WILL DO IT

[Clough]

Are you really wanting us to do your homework for you? That's not what this site is about. If you provide answers that you think are correct, and why you think they are correct, then you will receive help here.

Besides, what will you be doing while we are doing your homework for you? The reason that you have homework is for you to learn. If we provide the correct answers for you without your trying to get the correct answers yourself, and thus being able to give yourself credit for finding the answers, what would you have learned concerning the subject that you are studying.

Please see information on the following link.

https://www.askmehelpdesk.com/math-s...board-b-u.html

[TechSupport]

Clough, you're being too tough on little nikki, here. If she wants us to do her homework for her, then we will!

Let's see... um, the answer to how much I would pay for the company is six goats and a two-wheeled wagon.

And, um, hmmm... the next one's a tough one... the ending capital looks like it comes out to a bushel of apples and three pink chiffon dresses.

There. See? That wasn't so bad!

[bunnyKutty]

Net income = service revenue –salary and utility +additional monthly revenues – additional expenses
Net income = 14300 – 3400 – 900 +2100 -5750 = 6350
20 times of net income = 20*6350 = 127000
Henry's capital = capital –drawings + net income

Henry's expected price = 137400-2000 + 6350 = 141750
It is better to accept Henry's quoted price as we do not have to arrange for working capital and also can takeover the net fixed assets. The business can continue its activities as usual.
Working capital = current assets – current liabilities
= 9700+7900+2600-3800
= 16400
Net fixed assets = fixed assets – accumulated depreciation
=151300- 15600
=135700